Countries inherit endowments, but competitive advantage stems from skills, infrastructure, demanding customers, supporting industries, capable firms, and institutions that continuously improve products.
India is trying to anchor its development strategy in a harder world of wars, rising geopolitical tension and a spreading mistrust of globalisation, even as it holds to its ambition of becoming a developed country by 2047. Many industries have come under focus in terms of levelling up, say, semiconductors, electronics, advanced manufacturing, artificial intelligence, and clean energy. Rightfully so, they deserve the attention that they have been noted for and require substantial state capacities and investment for India’s agenda.
Alongside this, one industry that India has long marketed as something it has built receives far less attention than it deserves. That is tourism. Tourism is an employment-intensive economic indicator. As a service sector, tourism brings visitors from far and wide. According to ILO estimates, one direct tourism job can support roughly 1.5 additional jobs in the wider tourism economy. A recent World Bank review of a decade of tourism work across developing economies describes the sector as a driver of growth and job creation. According to a World Bank report, it mobilised more than $10 billion across 80 countries for tourism-related development over that period.
For India, tourism offers everything. It is a lived experience of how the country presents itself to the world. The quality and what we need in India begin with an inherent endowment that few countries possess: The Rann of Kutch, white to the horizon. Ladakh’s monasteries at altitude. The Ganges where it is still a mountain river. Rajasthan in full colour, and the deserts beyond it. The Mughal architecture of Delhi and Agra. The Buddhist landscape of Bihar and the ruins at Nalanda. The forests of Central India, and the wet forests, waterfalls and green of the Northeast. Kerala’s backwaters, the temples at Rameshwaram, the southern edge at Kanyakumari, and a coastline that runs from Vizag around to Goa and up to Gujarat. Therefore, within a single national border, India brings together a remarkable diversity of landscapes, histories, customs, cuisines, and civilisations. If endowment alone made a tourism power, India would already be one. It isn’t.
A country’s prosperity is created, not inherited. Countries inherit endowments, but competitive advantage stems from skills, infrastructure, demanding customers, supporting industries, capable firms, and institutions that continuously improve products. India has confused endowment with competitiveness. Its monuments, wildlife, mountains, coastlines, pilgrimage centres, and living cultures are inherited advantages. Competitiveness depends on the system built around them. That system lets a traveller in Tokyo or Singapore hear about a place, get a visa without dread, land, reach Delhi or anywhere else, understand what they are seeing, walk on pavements that work, pay without anxiety, and go home wanting to return. That is where competitive advantage is made.
India might have the most beautiful waterfalls in the Northeast, historical monuments, the Himalayas, Varanasi’s ghats, and countless wildlife reserves. It might have Kaziranga, Gir’s Asiatic lions, and tiger country across central India. India already has an extraordinary range of what makes tourism work. But endowment is only the starting point. The advantage is won on skills, reliable access, visitor management, and a model that leaves local communities better off for keeping the place intact. The numbers suggest we are not converting.
In 2024, Indians made 30.89 million trips abroad, and 42.52%, some 13.1 million, were for leisure, holiday and recreation. Leisure accounted for 76.1% of Indian departures to Southeast Asia and 68.3% to South Asia. Indian destinations no longer compete only with one another. They increasingly compete with Thailand, Sri Lanka, Vietnam, and Indonesia for the Indian traveller. Tourism generated about Rs 2.7 lakh crore (around US$31.69 billion) in foreign exchange. That year, Vietnam received close to 21.2 million foreign visitors, above its pre-pandemic peak. For a family planning a holiday, the choice is no longer Goa or Kerala. It can be Phuket, Sri Lanka, or the Maldives, destinations competing on experience and on lower costs than India’s domestic market.
Why, then, are India’s extraordinary attractions not enough to produce an incredible tourism experience? India clearly needs to become more competitive, but does that mean more airports, resorts, and luxury hotels? The answer is less obvious.
The recent Kaziranga controversy brings that tension into focus. Debates over luxury development around the last stronghold of the onehorned rhino raise a larger question. Should tourism development begin by asking how much construction the land can absorb, or how much lasting economic value the region can generate if kept intact?
The Northeast’s geographical importance, its biodiversity, cultural distinctiveness, and tranquillity are precisely what make it valuable. Recent floods, including the catastrophic one on the Nepal-Tibet border, show how exposed mountain and riverine destinations are to shocks that infrastructure alone cannot eliminate.
This is not an argument against luxury or investment. It is about community needs, jobs, and infrastructure, but even a world-class luxury hotel beside Kaziranga would not by itself create a world-class destination. Tourists buy an experience, and no single producer controls it. The hotel does not control the airport, the taxi, the guide, public safety, local transport, or the wildlife itself. The destination’s quality experience is a coordination problem.
If it is a weakest-link game, one incident of harassment, opaque pricing, or chaotic transport can overwhelm several excellent encounters and impose a trust deficit on the traveller. Ecology presents a collective action problem. A developer might gain from another luxury hotel, and an operator from another vehicle, while congestion, waste, water stress, and habitat loss are dispersed across the destination. Individually rational, these decisions can leave everyone with a less valuable asset.
Policy must be designed differently for each destination. Kerala’s communitylinked tourism, Gujarat’s ancillary development, psychological constraints, and Varanasi’s mass-privileged economy cannot share one Incredible India marketing campaign. There is no single tourism production function for India. The focus should be on building a competitive experience around each endowment without destroying it, with capital investment as an input rather than a binding constraint.
*Amit Kapoor is chair and Sheen Zutshi is research manager at the Institute for Competitiveness.X: @kautiliya.
